FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


             (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998
                            -------------------------

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the transition period from to


                             Commission file number
                                     0-21558


                            CNL Income Fund XII, Ltd.
             (Exact name of registrant as specified in its charter)


          Florida                        59-3078856
(State or other jurisdiction            (I.R.S. Employer
of incorporation or organiza-           Identification No.)
tion)


400 E. South Street
Orlando, Florida                              32801
----------------------------            -----------------
(Address of principal                       (Zip Code)
executive offices)


Registrant's telephone number
(including area code)                         (407) 422-1574


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.   Yes     X      No


<PAGE>









                                    CONTENTS






Part I                                                         Page

  Item 1.  Financial Statements:

             Condensed Balance Sheets                          1

             Condensed Statements of Income                    2

             Condensed Statements of Partners' Capital         3

             Condensed Statements of Cash Flows                4

             Notes to Condensed Financial Statements           5

  Item 2.  Management's Discussion and Analysis
             of Financial Condition and
             Results of Operations                             6-9


Part II

  Other Information                                            10


<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS


                                             June 30,              December 31,
            ASSETS                             1998                    1997
                                           -----------             -----------

Land and buildings on operating
  leases, less accumulated
  depreciation of $1,620,005 and
  $1,460,887                               $20,661,161              $20,820,279
Net investment in direct financing
  leases                                    13,568,092               13,656,265
Investment in joint ventures                 2,416,014                2,517,421
Cash and cash equivalents                    1,973,617                1,706,415
Receivables, less allowance for
  doubtful accounts of $120,958 and
  $7,482                                       115,829                  202,472
Prepaid expenses                                15,879                    7,216
Lease costs, less accumulated
  amortization of $2,261 and $1,307             27,292                   24,746
Accrued rental income                        2,428,740                2,496,176
                                           -----------              -----------

                                           $41,206,624              $41,430,990
                                           ===========              ===========


LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                           $     3,816              $    10,558
Accrued and escrowed real estate
  taxes payable                                 16,888                    3,244
Distributions payable                          956,252                  956,252
Due to related parties                           5,567                    6,887
Rents paid in advance and deposits             144,267                   36,737
                                           -----------              -----------
    Total liabilities                        1,126,790                1,013,678

Partners' capital                           40,079,834               40,417,312
                                           -----------              -----------

                                           $41,206,624              $41,430,990
                                           ===========              ===========



            See accompanying notes to condensed financial statements.

                                        1

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                            Quarter Ended                     Six Months Ended
                                                              June 30,                           June 30,
                                                     1998             1997             1998              1997
                                                  ----------       ----------       ----------        -------
<S> <C>
Revenues:
  Rental income from
    operating leases                              $  658,592       $  604,177       $1,285,138        $1,207,972
  Adjustments to accrued
    rental income                                   (224,867)              -          (224,867)               -
  Earned income from direct
    financing leases                                 390,877          410,956          798,551           821,923
  Contingent rental income                             6,295           20,546           13,717            25,963
  Interest and other income                           29,430           20,177           44,682            40,974
                                                  ----------       ----------       ----------        ----------
                                                     860,327        1,055,856        1,917,221         2,096,832
                                                  ----------       ----------       ----------        ----------

Expenses:
  General operating and
    administrative                                    31,541           42,054           66,006            80,776
  Professional services                                   -             5,505           12,986            12,162
  Bad debt expense                                    75,699               -            84,667                -
  Management fees to
    related parties                                   10,971           10,051           21,551            19,964
  Real estate taxes                                    1,152               -             1,152             1,410
  State and other taxes                                  405              406           17,653            18,496
  Depreciation and
    amortization                                      80,078           80,102          160,072           159,551
                                                  ----------       ----------       ----------        ----------
                                                     199,846          138,118          364,087           292,359
                                                  ----------       ----------       ----------        ----------

Income Before Equity in
  Earnings (Loss) of
  Joint Ventures                                     660,481          917,738        1,553,134         1,804,473

Equity in Earnings (Loss)
  of Joint Ventures                                  (43,758)          70,949           21,892           141,356
                                                  ----------       ----------       ----------        ----------

Net Income                                        $  616,723       $  988,687       $1,575,026        $1,945,829
                                                  ==========       ==========       ==========        ==========

Allocation of Net Income:
  General partners                                $    6,167       $    9,887       $   15,750        $   19,458
  Limited partners                                   610,556          978,800        1,559,276         1,926,371
                                                  ----------       ----------       ----------        ----------

                                                  $  616,723       $  988,687       $1,575,026        $1,945,829
                                                  ==========       ==========       ==========        ==========

Net Income Per Limited
  Partner Unit                                    $     0.14       $     0.22       $     0.35        $     0.43
                                                  ==========       ==========       ==========        ==========

Weighted Average Number
  of Limited Partner
  Units Outstanding                                4,500,000        4,500,000        4,500,000         4,500,000
                                                  ==========       ==========       ==========        ==========

</TABLE>


            See accompanying notes to condensed financial statements.

                                        2

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                  Six Months Ended              Year Ended
                                      June 30,                 December 31,
                                        1998                       1997
                                  ----------------             --------

General partners:
  Beginning balance                 $   192,411                 $   152,889
  Net income                             15,750                      39,522
                                    -----------                 -----------
                                        208,161                     192,411
                                    -----------                 -----------

Limited partners:
  Beginning balance                  40,224,901                  40,137,217
  Net income                          1,559,276                   3,912,692
  Distributions ($0.43 and $0.85
    per limited partner unit,
    respectively)                    (1,912,504)                 (3,825,008)
                                    -----------                 -----------
                                     39,871,673                  40,224,901
                                    -----------                 -----------

Total partners' capital             $40,079,834                 $40,417,312
                                    ===========                 ===========



            See accompanying notes to condensed financial statements.

                                        3

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS

                                                       Six Months Ended
                                                           June 30,
                                                   1998            1997
                                               -----------      ------------

Increase (Decrease) in Cash and Cash
  Equivalents:

    Net Cash Provided by Operating
      Activities                               $ 2,183,206      $ 1,931,238
                                               -----------      -----------

    Cash Flows From Investing
      Activities:
        Additions to land and buildings
          on operating leases                           -           (55,000)
        Collections on loan to tenant
          of joint venture                              -             4,171
        Payment of lease costs                      (3,500)         (24,052)
                                               -----------      -----------
            Net cash used in investing
              activities                            (3,500)         (74,881)
                                               -----------      -----------

    Cash Flows From Financing
      Activities:
        Distributions to limited
          partners                              (1,912,504)      (1,912,504)
                                               -----------      -----------
            Net cash used in
              financing activities              (1,912,504)      (1,912,504)
                                               -----------      -----------

Net Increase (Decrease) in Cash
  and Cash Equivalents                             267,202          (56,147)

Cash and Cash Equivalents at
  Beginning of Period                            1,706,415        1,800,601
                                               -----------      -----------

Cash and Cash Equivalents at End of
  Period                                       $ 1,973,617      $ 1,744,454
                                               ===========      ===========

Supplemental Schedule of Non-Cash
  Financing Activities:

    Distributions declared and unpaid
      at end of period                         $   956,252      $   956,252
                                               ===========      ===========


            See accompanying notes to condensed financial statements.

                                        4

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 30, 1998 and 1997


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the six  months  ended  June 30,  1998,  may not be  indicative  of the
         results  that may be expected  for the year ending  December  31, 1998.
         Amounts as of December 31, 1997, included in the financial  statements,
         have been derived from audited financial statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1997.

         The general partners are in the process of analyzing the effects of the
         consensus reached by the Financial  Accounting  Standards Board in EITF
         98-9, entitled "Accounting for Contingent Rent in the Interim Financial
         Periods,"  issued in May 1998. The general  partners do not expect that
         the  conclusions  reached in this consensus will have a material effect
         on the Partnership's financial position or results of operations.

                                        5

<PAGE>



ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  as well as properties upon which  restaurants were to be
constructed  (the  "Properties"),  which are leased  primarily  to  operators of
national and regional  fast-food and family-style  restaurant chains. The leases
are triple-net  leases,  with the lessees generally  responsible for all repairs
and maintenance,  property taxes, insurance and utilities.  As of June 30, 1998,
the  Partnership  owned 48 Properties,  including  interests in four  Properties
owned by joint ventures in which the Partnership is a co-venturer.

Liquidity and Capital Resources

         The  Partnership's  primary  source of capital for the six months ended
June 30, 1998 and 1997, was cash from  operations  (which includes cash received
from tenants,  distributions from joint ventures,  and interest and other income
received, less cash paid for expenses).  Cash from operations was $2,183,206 and
$1,931,238  for the six months ended June 30, 1998 and 1997,  respectively.  The
increase in cash from  operations  for the six months  ended June 30,  1998,  as
compared to the six months ended June 30, 1997, is primarily a result of changes
in the Partnership's working capital.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions to the partners.  At June 30, 1998, the Partnership had $1,973,617
invested in such short-term  investments,  as compared to $1,706,415 at December
31,  1997.  The increase in cash and cash  equivalents  for the six months ended
June 30, 1998, is primarily attributable to an increase in rents paid in advance
at June 30, 1998, as compared to December 31, 1997. The funds  remaining at June
30, 1998, after payment of distributions and other liabilities,  will be used to
meet the Partnership's working capital and other needs.

         Total  liabilities of the  Partnership  increased to $1,126,790 at June
30, 1998,  from  $1,013,678 at December 31, 1997,  primarily as the result of an
increase in rents paid in advance at June 30, 1998,  as compared to December 31,
1997. The general  partners  believe that the Partnership has sufficient cash on
hand to meet its current working capital needs.

         Based on cash from operations,  the Partnership declared  distributions
to the limited  partners of $1,912,504 for each of the six months ended June 30,
1998 and 1997  ($956,252 for each of the quarters ended June 30, 1998 and 1997).
This represents  distributions  for each applicable six months of $0.43 per unit
($0.21 per unit for each applicable quarter).  No distributions were made to the
general partners for the quarters and six months

                                        6

<PAGE>



Liquidity and Capital Resources - Continued

ended June 30, 1998 and 1997. No amounts distributed to the limited partners for
the six months  ended June 30,  1998 and 1997,  are  required to be or have been
treated by the  Partnership  as a return of capital for purposes of  calculating
the  limited  partners'  return on their  adjusted  capital  contributions.  The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the limited partners on a quarterly basis.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

Results of Operations

         During the six months  ended June 30,  1998 and 1997,  the  Partnership
owned and leased 44 wholly  owned  Properties  to  operators  of  fast-food  and
family-style  restaurant chains. In connection therewith,  during the six months
ended June 30, 1998 and 1997, the Partnership  earned $1,858,822 and $2,029,895,
respectively,  in rental income from  operating  leases (net of  adjustments  to
accrued rental income) and earned income from direct financing leases from these
Properties,  $824,602  and  $1,015,133  of which was earned  during the quarters
ended June 30, 1998 and 1997,  respectively.  The  decrease in rental and earned
income during the quarter and six months ended June 30, 1998, as compared to the
quarter and six months ended June 30, 1997,  is  primarily  attributable  to the
fact that in June 1998, the tenant of the Properties in Monroe,  Statesville and
Morganton,  North Carolina filed for bankruptcy and rejected the leases relating
to these Properties.  As a result,  during the quarter and six months ended June
30, 1998, the  Partnership  wrote off  approximately  $224,900 of accrued rental
income  (non-cash  accounting  adjustments  relating to the  straight-lining  of
future scheduled rent increases over the lease term in accordance with generally
accepted accounting  principles).  The Partnership also established an allowance
for doubtful  accounts during the quarter and six months ended June 30, 1998, of
approximately  $19,100 for rental and earned  income due from this tenant due to
the fact that collection of such amounts is  questionable.  The general partners
are  currently  seeking  either  replacement  tenants  or  purchasers  for these
Properties. The Partnership will not recognize any rental and earned income from
these  Properties until  replacement  tenants or purchasers for these Properties
are located.




                                        7

<PAGE>



Results of Operations - Continued

         The  decrease  in rental and earned  income  during the quarter and six
months  ended June 30,  1998 was  partially  offset by an increase in rental and
earned income of approximately  $77,500 as a result of the Partnership  entering
into a new lease with a new tenant for the Property in Tempe, Arizona, for which
rental  payments  commenced in July 1997. No rental and earned income was earned
during the quarter and six months  ended June 30, 1997 due to the former  tenant
declaring bankruptcy in July 1996.

         For the six months ended June 30, 1998 and 1997, the  Partnership  also
earned $13,717 and $25,963,  respectively,  in contingent rental income,  $6,295
and  $20,546 of which was earned  during the  quarters  ended June 30,  1998 and
1997, respectively.  The decrease in contingent rental income during the quarter
and six months  ended June 30,  1998,  as compared to the quarter and six months
ended June 30, 1997, is primarily  attributable  to a decrease in gross sales of
certain  restaurant  properties  whose leases  require the payment of contingent
rental income.

         For the six months ended June 30, 1998 and 1997, the Partnership  owned
and leased four Properties  indirectly  through joint venture  arrangements.  In
connection  therewith,  during the six months ended June 30, 1998 and 1997,  the
Partnership  earned  $21,892 and  $141,356,  respectively,  attributable  to net
income earned by these joint ventures, including a loss of $43,758 and income of
$70,949  during the  quarters  ended June 30, 1998 and 1997,  respectively.  The
decrease in net income is primarily due to the fact that  Kingsville Real Estate
Joint Venture (in which the  Partnership  owns a 31.13%  interest in the profits
and losses of the joint venture)  established an allowance for doubtful accounts
of  approximately  $50,800 and $65,900  during the quarter and six months  ended
June 30, 1998,  respectively,  in accordance with its collection policy. No such
allowance was established during the quarter and six months ended June 30, 1997.
In addition,  during the quarter and six months  ended June 30, 1998,  the joint
venture  established  an allowance  for loss on land and net  investment  in the
direct  financing lease for its Property in Kingsville,  Texas of  approximately
$316,000.  The  allowance  represents  the  difference  between  the  Property's
carrying  value at June 30, 1998 and the estimated net  realizable  value of the
Property.  Kingsville  Real Estate Joint Venture is currently  seeking  either a
replacement tenant or purchaser for this Property.

         Operating expenses,  including  depreciation and amortization  expense,
were  $364,087  and  $292,359  for the six months  ended June 30, 1998 and 1997,
respectively,  of which  $199,846  and $138,118  were  incurred for the quarters
ended June 30, 1998 and 1997,  respectively.  The increase in operating expenses
during the quarter and six months ended June 30, 1998 is primarily  attributable
to the  fact  that  the  Partnership  recorded  bad  debt  expense  for past due
principal and interest amounts relating to the


                                        8

<PAGE>



Results of Operations - Continued

loan with the tenant of the Property in Kingsville  Real Estate Joint Venture in
accordance with its collection  policy.  The general partners are in the process
of negotiating an arrangement to collect past due amounts and will recognize any
such amounts as income if collected.

         The general partners are in the process of analyzing the effects of the
consensus  reached by the "Financial  Accounting  Standards  Board in EITF 98-9,
entitled  "Accounting  for Contingent  Rent in the Interim  Financial  Periods,"
issued in May 1998.  The general  partners  do not expect  that the  conclusions
reached  in this  consensus  will have a  material  effect on the  Partnership's
financial position or results of operations.

                                        9

<PAGE>



                           PART II. OTHER INFORMATION


Item 1.           Legal Proceedings.  Inapplicable.

Item 2.           Changes in Securities.  Inapplicable.

Item 3.           Defaults upon Senior Securities.  Inapplicable.

Item 4.           Submission of Matters to a Vote of Security Holders.

                  Inapplicable.

Item 5.           Other Information.  Inapplicable.

Item 6.           Exhibits and Reports on Form 8-K.

                  (a)      Exhibits - None.

                  (b)      No reports on Form 8-K were filed  during the quarter
                           ended June 30, 1998.

                                       10

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 13th day of August, 1998.


                            CNL INCOME FUND XII, LTD.

                            By:      CNL REALTY CORPORATION
                                     General Partner


                                     By:      /s/ James M. Seneff, Jr.
                                              -----------------------------
                                              JAMES M. SENEFF, JR.
                                              Chief Executive Officer
                                              (Principal Executive Officer)


                                     By:      /s/ Robert A. Bourne
                                              -----------------------------
                                              ROBERT A. BOURNE
                                              President and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)